Scam-hit PNB posts huge loss

With regards to provision made for the loss incurred on account of Nirav Modi fraud, the bank said it provided for Rs 7,178 crore, 50 per cent of the total amount of Rs 14,356 crore in the fourth quarter of 2017-18.

"Their capital is very low, and a bank needs it to sustain growth", said Yuvraj Choudhary, an analyst at Mumbai brokerage Anand Rathi, who said PNB's reported loss was more than triple his estimate, calling it a "major concern".

State-run Punjab National Bank posted its highest-ever quarterly loss at Rs 13,416.91 crore in the January-March quarter as it took a massive hit from the Rs 14,000-crore Nirav Modi scam.

The fraud was detected at PNB's Brady House branch in Mumbai involving certain accounts under gems and jewellery sector wherein, through apparent connivance between these entities and few employees of the bank, some LoUs/FLCs were issued fraudulently to certain overseas branches of Indian banks through misuse of the SWIFT messaging system.

The filing further said that the bank has made higher than required provisions amounting to Rs 7,178.42 crore.

While the bank had reported a Profit after Tax for the year at Rs 1,324.80 crore, RBI, after considering under-reported provisioning, reworked the profit to less than half of it at Rs 532.60 crore.

Currently, the probe agencies are investigating the matter and have also seized many properties of Nirav and Choksi.

PNB accounted for Rs 44274 crore of incremental bad loans in the March quarter - including Rs 7579 crore related to the fraud and 102.37 billion rupees after the stricter RBI rules - taking its gross non-performing assets ratio to 18.38 percent of the total at the end of March.

The fraud was first disclosed by PNB in February to be worth Rs 11,400 crore but was later raised to Rs 12,700 crore as new facts came to light.

Moreover, the bank has created liability in the books in respect of LOUs/FLCs which were due after March 31 amounting to Rs 6959.79 crores.

The total income for the fourth quarter declined to Rs 12,945.68 crore from Rs 14,989.33 crore in the year-ago period.

As a result, provisions for the bad loans jumped four-fold to Rs 16,202.82 crore for the quarter under review compared to Rs 4,910.39 crore parked aside in the same period a year ago. Similarly, the net NPA also rose to Rs 48,684.29 crore from Rs 32,702 crore at the end of March 2017. In the fourth quarter, the bank's gross domestic business grew 7.8 per cent on annual basis over the corresponding period past year to Rs 10.31 lakh crore, PNB said in a statement. It ended the FY18 with a net loss of Rs 12,283 crore, against a profit of Rs 1,324.8 crore in the year before.

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